Washington Post 2003 Annual Report Download - page 48

(after-tax impact of $12.1 million, or $1.27 per share), charges Foundation. Operating results for 2002 included $19.0 million in
from early retirement programs (after-tax impact of $11.3 million, pre-tax charges from early retirement programs. The Company's
or $1.18 per share), and a net non-operating loss from the write- year-to-date results were adversely impacted by a reduction in
down of certain of the Company's investments (after-tax impact of operating income at the television broadcasting division and a
$2.3 million, or $0.24 per share). reduced net pension credit. Improved results at the Company's
newspaper publishing, magazine publishing and cable television
Results for 2003 include $119.1 million in stock compensation divisions helped to offset these declines.
expense at the Kaplan education division, which was significantly
higher than the $34.5 million in Kaplan stock compensation expense The Company's 2003 operating income includes $55.1 million of
in 2002. In September 2003, the Company announced an offer net pension credits, compared to $64.4 million in 2002. These
totaling $138 million for approximately 55 percent of the stock amounts exclude $34.1 million and $19.0 million in charges related
options outstanding at Kaplan. The Company's offer included a 10 to early retirement programs in 2003 and 2002, respectively.
percent premium over the current valuation price. The Company
DIVISION RESULTS
paid out $118.7 million in the fourth quarter of 2003, with the
remainder of the payouts to be made from 2004 through 2007. A Newspaper Publishing Division. Newspaper publishing divi-
small number of key Kaplan executives will continue to hold the sion revenue in 2003 increased 4 percent to $872.8 million, from
remaining 45 percent of outstanding Kaplan stock options, with $842.0 million in 2002. Division operating income for 2003
roughly half of the remaining options expiring in 2007 and half totaled $134.2 million, an increase of 23 percent from operating
expiring in 2011. The Company does not expect to issue additional income of $109.0 million in 2002. Operating results for 2003
Kaplan stock options in the future. include a fourth quarter $41.7 million pre-tax gain on the sale of
land at The Washington Post newspaper and $34.1 million in pre-
Revenue for 2003 was $2,838.9 million, up 10 percent compared
tax charges from early retirement programs at The Washington Post
to revenue of $2,584.2 million in 2002. The increase in revenue is
newspaper. Operating results for 2002 included a $2.9 million
due mostly to significant revenue growth at the education division,
charge from an early retirement program at The Washington Post
along with increases at the Company's cable television, newspaper
newspaper. Improved operating results for 2003 are due to
publishing, and magazine publishing divisions; revenues were down
increased advertising revenue and cost control initiatives employed
at the television broadcasting division. Advertising revenue
throughout the division, offset by a 3 percent increase in newsprint
increased 1 percent in 2003, and circulation and subscriber reve-
expense, incremental costs associated with the war in Iraq, a
nue increased 5 percent. Education revenue increased 35 percent
reduced pension credit, and a small loss from a new commuter
in 2003, and other revenue was flat. The increase in advertising
newspaper, Express, which was launched in August 2003. Operat-
revenue is due to increases at the newspaper publishing and
ing margin at the newspaper publishing division was 15 percent for
magazine publishing divisions, offset by a decline at the television
2003 and 13 percent for 2002.
broadcasting division due primarily to significant political revenues in
2002. The increase in circulation and subscriber revenue is due to Print advertising revenue at The Washington Post newspaper
an 8 percent increase in subscriber revenue at the cable division increased 3 percent to $572.2 million, from $555.7 million in
from continued growth in cable modem and digital service revenues, 2002. The rise in print advertising revenue for 2003 was due to
a 1 percent increase in circulation revenue at The Post, and a slight increases in general and preprint advertising revenue, which more
increase in Newsweek circulation revenues due to increased news- than offset declines in classified and retail advertising revenue from
stand sales for both the domestic and international editions of volume declines. Classified recruitment advertising revenue
Newsweek. Revenue growth at Kaplan, Inc. (about 43 percent of decreased $6.1 million in 2003, due to a 14 percent volume
which was from acquisitions) accounted for the increase in educa- decline. Classified recruitment advertising revenue increased by
tion revenue. $0.8 million, or 6 percent, during the fourth quarter of 2003, with
flat volume compared to 2002. This was the first quarter with an
Operating costs and expenses for the year increased 12 percent to
increase in classified recruitment advertising revenue since the third
$2,475.1 million, from $2,206.6 million in 2002. The increase is
quarter of 2000.
primarily due to a significant increase in stock-based compensation
at Kaplan, higher expenses from operating growth at Kaplan, early Circulation revenue at The Post was up 1 percent for 2003 due to
retirement program charges, higher newsprint prices and a reduced an increase in home delivery prices. Daily circulation at The Post
pension credit, offset by a $41.7 million pre-tax gain on the sale of declined 2.0 percent, and Sunday circulation declined 1.8 percent.
land at The Washington Post newspaper. Single copy sales contributed to the decline, with a 9 percent daily
decrease and a 6 percent Sunday decrease. For the year ended
Operating income declined 4 percent to $363.8 million, from
December 28, 2003, average daily circulation at The Post totaled
$377.6 million in 2002, due largely to the $84.6 million increase in
745,000 (unaudited), and average Sunday circulation totaled
Kaplan stock compensation discussed above. Operating results for
1,035,000 (unaudited).
2003 also include a $41.7 million pre-tax gain on the sale of land
at The Washington Post newspaper, $34.1 million in pre-tax During 2003, revenue generated by the Company's online publish-
charges from early retirement programs at The Washington Post ing activities, primarily washingtonpost.com, increased 30 percent
newspaper, and a $6.5 million charge for the Kaplan Educational to $46.9 million, from $35.9 million in 2002. Local and national
28 THE WASHINGTON POST COMPANY